(Warren) Buffett's Silver Streak (2001)

[CrackSmokeRepublican]

Keep in mind....

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Buffett's Silver Streak
By Dan Kadlec Sunday, June 24, 2001

Being a genius investor has its rewards besides making one filthy rich. Chief among them is knowing that hordes of people will follow your every move once you disclose what you have most recently bought. All the genius wannabes, you can be sure, will pile in and drive up the price of what you already own. Great work if you can find it.

So it was last week in the silver market, where prices spiked to a nine-year high after Warren Buffett, the Oracle of Omaha, disclosed that he had taken a major shine to the metal and bought up 129.7 million oz. of the stuff. That amounts to 37% of the world's above ground stock of raw silver, according to the CPM group, a commodities and precious-metals consulting firm.

Buffett made his gleaming presence felt. The price for an ounce of silver to be delivered in March hit $7.28, up 16% in the two days after Buffett's disclosure and up nearly 70% since he started buying the precious metal six months ago. Despite the surge, veteran--and thus oft-pummeled--silver traders will note that a price just north of $7 is nothing next to silver's peak in 1980, when it hit $50 amid an infamous attempt by the brothers Herbert and Nelson Hunt to corner the market.

Still, the jump in price spread chaos across the market as Buffett called for delivery of more than 42 million oz. of the silver he had bought--after already having some 87 million oz. in tow. Panicky short sellers, who had borrowed silver and sold it in the expectation that the price would fall, had to swallow huge losses to complete the deals. Major buyers of silver like Eastman Kodak, which processes millions of ounces a year into film, faced big increases in raw-material costs. And everywhere families began eyeing grandma's precious flatware as a possible source of cash. "We think we may see the spike reach double digits--maybe $10 an ounce--but one doesn't really know in this rarefied territory," says Nick Moore, director of Flemings Global Mining Group in London.

Buffett's purchases shifted vast amounts of silver from U.S. warehouses, where stocks of the metal were publicly listed, to warehouses in London that are not required to disclose how much they hold. That helped to keep the purchases under wraps. The disappearance caused a Canadian investor to sue the giant commodities-trading firm Phibro for deliberately hiding supplies of silver to push prices up. Phibro, a unit of the Travelers Group--whose shareholders include Buffett's Berkshire Hathaway holding company--denied the charge.

Buffett's silver spree caught almost everyone off guard. After all, the man made his personal billions--$25 billion at last count--by buying and holding undervalued stocks. But silver doesn't even pay a dividend and, worse, costs money to store. So why on earth did Buffett use Berkshire to acquire 4,000 tons of silver--a cache weighing more than 10 Boeing 747s--at a cost of $650 million between July 25 and Jan. 12? Until then, Buffett hadn't owned an ounce in 30 years.

For starters, silver prices were down last summer. That made the metal a value play, something Buffett is good at. In fact, Buffett says in a statement that he saw a huge imbalance between the amount of silver available and the demand for it to make things like jewelry, photographic supplies, electronic components, mirrors and batteries. So he began buying because "equilibrium between supply and demand was only likely to be established by a somewhat higher price." Translation: It looked like a good deal.

More than most tycoons, Buffett is forthcoming, and there is no reason to doubt his word. But there's also a bigger picture that's worth a look. At Berkshire's annual meeting last year, Buffett warned that the stock market was presenting few bargains and that investors should expect dramatically lower returns. Just last fall he bought $2 billion of--gasp!--long-term Treasury bonds, an investment that betrays some concern about stocks. Now he turns around and buys enough silver to make the Hunts jealous. Could it be that Buffett has soured on the stock market?

Not a chance, says Robert Hagstrom, author of The Warren Buffett Way and manager of the Focus Trust, a stock fund that tries to mimic Buffett's style. "You shouldn't take this as a cue to be seduced into commodities, and don't misunderstand this as a big move out of stocks," Hagstrom says. Indeed, the silver and T-bonds, even after recent run-ups in price, account for less than 10% of Berkshire's $34 billion portfolio.

But another Buffett watcher, Stephen Leeb, editor of the newsletter Personal Finance, notes that Buffett may feel vulnerable. The stock market has roared ahead in the past three years on the power of a "perfect-world" economy, one where inflation was low but earnings were robust. Buffett's stocks, more than most, have been big winners. Coca-Cola, his largest holding, has shown an average annual gain of 36.2% since the end of 1994, vs. 30.6% for the Standard & Poor's 500. Coke now trades at about $67 a share, more than 40 times last year's earnings and close to double the earnings multiple for the average stock.

     

"Perfect worlds don't last forever, and Buffett knows that," Leeb says. What Buffett doesn't know is how, or when, this one will unravel. But he's not alone in planning for problems. Some other high-profile investors, including Loews Corp. chairman Lawrence Tisch and international investor George Soros, have big stakes in metals-mining operations. And Federal Reserve Chairman Alan Greenspan has been talking about either inflation or deflation at various times in the past few months. Either one could knock the stock market for a loop, and Buffett's highfliers probably would be among the hardest hit.

So Buffett has been moving to protect against both risks. The T-bonds he bought last fall give him a hedge against deflation. Their value would soar if the economy soured and knocked down interest rates. The silver he just picked up gives him a hedge on the other side. The metal would gain value along with other commodities in a heated economy that raised inflation and interest rates. But small investors should be wary of following Buffett into silver lest he decide to take his profits and run. "How long will this last?" asks Moore of Flemings Global. "Buffett has to exit at some stage, and how he does that will determine whether it is a buffet or a banquet."

But that's your concern, not Buffett's. Assuming he hasn't already sold, which we probably wouldn't know until the selling was over, he's hedged in all directions at once. In uncertain times, that may be the ultimate sign of genius.

http://www.time.com/time/magazine/artic ... 93,00.html

[CrackSmokeRepublican]

Phibro and Marc Rich.... why are commodities "high"... because Jews are "scamming"... --CSR

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JULY 18, 2005


RELATED ITEMS
Graphic: Members Of The Network

Graphic: The Oil-For-Food Trail

INVESTIGATIVE REPORT

The Rich Boys
An ultra-secretive network rules independent oil trading. Its mentor: Marc Rich

One brisk day last fall, globe-trotting oil executive Benjamin R. Pollner was leaving his luxury prewar apartment building on Manhattan's Park Avenue when detectives from Manhattan District Attorney Robert M. Morgenthau's office approached. They began asking him about his alleged involvement in the unfolding U.N. Oil-for-Food scandal. Pollner, a tall, lean sixtysomething who wears European-cut clothes and a world-weary visage, was taken aback, say investigators familiar with the incident.


He snapped that he was in a hurry to make an overseas flight and refused to answer questions. Before hopping into a car that whisked him off to John F. Kennedy International airport, Morgenthau's investigators say Pollner delivered a parting shot: "I did nothing in New York or the U.S. that would be considered illegal." To them, Pollner was admitting he had done something wrong -- just not in their jurisdiction. Pollner, who runs Taurus Petroleum mainly from offices in Geneva and London, hasn't set foot in the U.S. since, investigators believe. He didn't reply to several calls and e-mails.

On the morning of Apr. 14, David Bay Chalmers Jr., 51, who owns privately held oil-trading company Bayoil U.S.A. Inc., emerged handcuffed and bleary-eyed from his high-security mansion in Houston's ritzy River Oaks neighborhood. He had just been indicted by the U.S. Attorney for the Southern District of New York for conspiracy, wire fraud, and trading with a country that supports terrorism -- Iraq -- during the U.N. program. Chalmers has pleaded not guilty.

Another trader, Patrick Maugein, nonexecutive chairman of London's SOCO International PLC oil-trading company, has been under scrutiny by the U.N. for his alleged role in a complex oil-smuggling scheme during Oil-for-Food, the U.N. program that allowed Iraq to sell oil for humanitarian purposes during a period of strict sanctions. Although many deals were legitimate, Saddam Hussein at times demanded illegal surcharges for the right to buy oil at below-market prices. Friends of Saddam's regime allegedly received sweetheart oil allocations, investigators say. Maugein denies violating sanctions or paying illegal surcharges.

LEARNING FROM EL MATADOR

What do the three men have in common, aside from their dubious deals with Iraq? They all belong to the ultrasecretive informal network of traders who dominate global independent oil trading. They don't necessarily act in concert with each other, but they often chase the same opportunities. They are the Rich Boys. All operate in the world of onetime fugitive billionaire Marc Rich, the most-wanted white-collar criminal in U.S. history until his controversial pardon on President Bill Clinton's last day in office in 2001.

Rich came to prominence in the 1970s, when he worked at Phillips Bros. (later Phibro), then the biggest trader. With veteran partner Pincus "Pinky" Green, he pioneered "combat trading" -- getting trading rights from countries in turmoil. Rich, called El Matador for his killer instinct, did the deals. Pinky, "The Admiral," arranged shipping.

Traders soon learned the art of the Rich deal: Do whatever it takes. After Rich and Green left Phibro in 1973 to form their own company, they bought a house in the South of France and "stocked it with hookers from Paris and flew in oil guys who spent a week at their expense," says a former U.S. oil executive who knows Rich. "They got the oil contracts they wanted." A former Rich partner corroborates this. Green, who retired in 1992 after heart surgery, could not be reached for comment.

Rich is notorious for trading with Iran during the hostage crisis, South Africa during apartheid, and Cuba and Libya during U.S. trade embargoes. In 1983 he fled to Switzerland after being indicted by the Justice Dept. for racketeering, trading with the enemy (Iran), dodging a $48 million corporate tax bill, and other violations that could have resulted in 300 years of jail time. Rich's companies pleaded guilty to some charges and paid about $200 million in fines, penalties, and taxes, but the case remained open until the pardon. "Rich's philosophy is that no law applies to him," says Morris "Sandy" Weinberg Jr., the former U.S. prosecutor who pursued and indicted Rich in 1983.

Over the years, Rich has mentored scores of traders. Although the 70-year-old is past his peak in the business, according to industry experts, his protégés are thriving. pt or politically"You could call it the University of Marc Rich," says a Senate investigator. As Alaskan and North Sea oil production declines, new supplies increasingly come from some of the most corru unstable places on earth, such as Equatorial Guinea and Sudan. These are the new frontiers where major U.S. oil companies fear to tread because of sanctions, embargoes, and antibribery and anti-terrorism laws. But it's where these traders, many like characters out of the James Bond flick Goldfinger, make good money, especially when oil tops $60 a barrel.

Governments and law enforcers have long been suspicious of some Rich Boys. In a six-month investigation, BusinessWeek has pieced together the first comprehensive look at their sprawling and deliberately elusive operations. Our findings:

-- Rich has spawned the most powerful informal network of independent commodities traders on earth. He did it primarily by funding spin-offs and startups around the globe for decades, and by training scores of traders who have set up their own shops. Although Rich no longer maintains stakes in most of these outfits, he has helped create a network that, in sum, is far more formidable than his own company in the 1970s and 1980s, when it was the world's premier commodities trader.

-- The Rich Boys' often controversial activities are on the rise. They buy oil from places where corruption is extensive: Some of the Rich Boys have been named in scandals in Nigeria and Venezuela. They also sell oil from pariah states to U.S. refiners.

-- Although Rich testified in writing in March, 2005, to a House committee investigating the U.N. program that he was not in any way active in the Oil-for-Food program, documents suggest that he bought Iraqi oil in 2001 from various front companies, which BusinessWeek has identified. This took place just one month after his pardon. If so, it seems that Rich may have misled Congress. The CIA, the Senate, and others have concluded that from September, 2000, until September, 2002, buyers in the Oil-for-Food oil program had to pay illegal surcharges that Saddam used in part to buy weapons, though no documents show Rich made such payments. Some investigators believe Iraqi insurgents are now using that money.

-- One company from which Rich bought crude during this period was a front for extremist Russian and Ukrainian organizations. All were pro-Saddam; one was a staunch supporter of North Korean dictator Kim Jong Il. Another company was tied to a major money launderer for Saddam.

To reach these conclusions, BusinessWeek traced crucial connections from a number of official inquiries and documents. Key among these documents: shipping tables from the Middle East Economic Survey (MEES), the preeminent authority on tanker activity in the Middle East. These detail the ports, tankers, destinations, and buyers of Iraqi crude. Other insights came from a 2004 CIA report on Iraq, data from Switzerland's Federal Commercial Registry Office, and the many inquiries launched into Oil-for-Food. The Justice Dept., six congressional committees, a U.N. commission, Morgenthau's office, and several countries, including Switzerland, are all investigating the program. Extensive interviews with dozens of oil traders, government investigators, and energy experts around the globe helped form a clearer picture of how the network operates.

Rich did not respond to numerous requests for interviews. But Thomas Frutig, CEO of his major holding company, Marc Rich + Co. Holding, denied to BusinessWeek involvement in Oil-for-Food. Frutig declined to respond to other allegations, despite repeated phone and e-mail requests. Trader Clyde Meltzer, one of Rich's business partners in the 1970s who remains close to him, says: "Marc is the most upstanding guy you'll ever meet. It's untrue he ever did anything dishonest."

Rich's trading in 2001 sheds a harsh new light on his pardon, which is limited to his 1983 indictment. To revoke it would require a constitutional amendment. Even so, it's possible authorities could levy new criminal charges against Rich, who is worth up to $8 billion by some estimates, for activities not included in the pardon. A federal grand jury in New York is apparently still investigating whether any of the money Rich and other traders allegedly funneled to Saddam was used to fund terrorism. The U.S. Attorney's office declined to comment. In 2001, New York State sued Rich for tax evasion, seeking $137 million they say he owes. But given Rich's clout -- he is a major philanthropist, one of Switzerland's largest taxpayers, and extremely well connected -- he'll likely continue to enjoy the good life abroad.

MAVERICKS IN THE MIDDLE
Like Marc Rich + Co. holding, most of the Rich Boys have offices in the tiny Swiss canton of Zug, with its quaint stores, Gothic architecture, and low tax rates. These maverick middlemen typically don't own or operate oil refineries or wells. Instead, they buy oil from producers, line up buyers to refine it, and charter tankers to ship it. Oil trading is often nebulous and opaque. Title to a tanker's oil, for example, may change a dozen times before the ship reaches port.

Some of the Rich Boys, like Pollner and Chalmers, have never worked for Rich. They've merely done business with him or have connections to him through other traders. Typically, Rich has bankrolled or owned stakes in the traders' companies, or sold them to close associates. Among the mightiest is commodities giant Glencore International, based in a suburb of Zug, which boasts annual turnover of $72 billion, according to its financial disclosures, making it one of the world's largest private companies. Glencore owns scores of other commodities companies from Spain to Australia. Rich sold the firm to its management in 1994, and the company says it now has no connection with Rich. It is run by former Rich lieutenants Ivan Glasenberg and Willy Strothotte, according to its Web site.

Companies run by the Rich Boys span the globe. Consider Netherlands-based Trafigura Group, one of the world's top trading companies. According to industry experts and investigators, it was founded in 1993 by former Rich traders with money from Rich. Experts say he invested in companies like Trafigura to expand his empire, though most contend he no longer has a stake in them. Zug-based Masefield Group was also founded by former Rich traders. In Moscow, there's Milio International Ltd., formed by Rich traders in 1997. Rich's flight to Switzerland in 1983 didn't stop him from financing companies in the U.S., among them Novarco, a White Plains (N.Y.) commodities-trading business he established in 1997. He sold its oil contracts in 2002 to Richmond (Va.)-based Dominion Resources Inc. (D ), according to company reports.

Many of the Rich Boys' tactics may be hyperaggressive, but they're perfectly legal. One way they do business: exploiting opportunity in Eastern European or Third World countries in dire need of funding. Rich taught his disciples -- called Lehrlings, German for apprentices -- to lend cash-strapped companies money and get the right to buy their commodities, industry experts say. Last year, for example, Glencore loaned $40 million to Peru's second-largest zinc miner, Volcan Compañia Minera. Volcan agreed to sell zinc and other minerals to Glencore from 2004 to 2010.

At times, some Rich boys apparently use front companies -- opaque holding entities -- to disguise deals. According to Senate documents, they have set up fronts with innocuous names such as Rescor Inc. or Plasco Shipping. Based in tax havens with strong banking secrecy such as Panama, Liechtenstein, and Gibraltar, they come and go like flickering harbor lights once a deal is done.

David Chalmers found such companies useful in trading Iraqi crude during sanctions, according to the Senate subcommittee on permanent investigations. It alleged he routinely used a company called Italtech to do business in Iraq. The submarine-engine outfit was started in the late '80s by Chilean-Italian arms dealer Augusto Giangrandi, who headed the Bermuda subsidiary of Chalmers' Bayoil. Italtech opportunistically morphed into an oil trader in 1999. Chalmers' lawyer, Bart Dalton, says Italtech "was not a front company."

Ben Pollner, law enforcement officials believe, was behind Fenar Petroleum and Alcon Petroleum, registered in Liechtenstein in 1999, according to corporate registry documents. They were among the largest oil purchasers during Oil-for-Food, together exporting $2.47 billion worth of crude, according to a report by the U.N. Independent Inquiry Committee, chaired by former Federal Reserve Chairman Paul A. Volcker. Investigators allege they paid tens of millions in illegal surcharges. The companies sold almost exclusively to Pollner's company, Taurus, MEES shows. "We've interviewed more than a dozen traders who claim [that although] Pollner was working on his own deals, he was often acting on behalf of Rich, too," says a senior prosecutor investigating possible Oil-for-Food violations.

THRIVING IN TROUBLE SPOTS
One reason the rich boys are so busy these days is because they thrive in a world of high oil prices and scarce reserves. Big U.S. oil companies are desperate for crude yet don't want to dirty their hands getting it from global trouble spots. Says a former partner of Rich's, who requested anonymity because he routinely trades with Big Oil: "Majors don't want to touch the oil, yet they want to buy it. If you think Pablo Escobar [the Colombian drug king] was guilty, weren't people who used cocaine, too?" In fact, half the crude on which Oil-for-Food surcharges were paid ultimately ended up with U.S. majors, according to the Senate. Says Richard Perkins, former director of worldwide oil trading at Chevron Corp.: "The majors are the bread and butter" of traders like the Rich Boys.

U.S. companies are forbidden from bribing officials. If they do, it can prove damaging. The Securities & Exchange Commission, for example, is probing Marathon Oil (MRO ), ExxonMobil (XOM ), Amerada Hess (AHC ), Chevron (CVX ), and others for allegedly bribing President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea and his relatives for oil rights. The companies say they're cooperating with the SEC and that they acted lawfully.

Oil majors are also under pressure to shun pariah states. For instance, there are tight limits on deals with war-torn Sudan because it backs terrorism and engages in genocide. But companies set up by the Rich Boys, including Trafigura and Glencore, are among those buying crude there, trade reports say. China is a big customer for the Rich Boys there and elsewhere. Still, says Hal C. Eren, principal attorney at Washington's Eren Law Firm and a former U.S. Treasury Dept. official, tighter controls have "created a situation that's definitely helping independent traders."

Because the Rich Boys operate in such secrecy, one of the few ways to see how they work is when they get busted or investigated. For example, in Nigeria last year, Petrodel, a firm run by former top Rich trader Michael Prest, Glencore, Trafigura, and several other firms, were accused by Nigeria's state oil company of inflating shipping costs by doctoring documents. The Nigerians demanded repayments of more than $100 million. Trafigura denies the allegations and says that all past problems have been resolved. A Glencore spokesman "vigorously disputes" the charges. Petrodel officials and Prest could not be reached for comment.

Some Rich Boys also have their hand in oil-rich Venezuela, whose leftist leader, President Hugo Chávez, is at odds with the Bush Administration. After an oil workers' strike in 2003, Glencore and two U.S. traders allegedly paid kickbacks to secure deals with oil monopoly Petróleos de Venezuela (PDVSA), according to The Wall Street Journal. PDVSA denied accepting bribes and Glencore denied making any illegal payments.

THE SADDAM CONNECTION
Some of the most compelling details to emerge from Oil-for-Food probes revolve around Rich himself. BusinessWeek has pieced together information suggesting that, despite his denials, Rich did buy Iraqi crude from several questionable companies during the program. His name appears in shipping records compiled by MEES. These show he bought from four separate companies, starting in February, 2001: Onako Oil Co., a subsidiary of Alfa Group, one of Russia's largest conglomerates; an Egyptian company called International Company for Petroleum & Industrial Services (or INCOME, for short); and a Swiss company, Zerich, with ties to some extremist groups. The fourth, EOTC, remains a mystery. Hesham Sheta, vice-chairman of INCOME's parent company in Cairo, Egypt, International Group for Investments, confirmed that "Marc Rich has been INCOME's 'agent' [oil trader] since 1990" and that Rich bought Iraqi crude from INCOME in 2001. Zerich has since been liquidated. Alfa denies paying surcharges.

Rich tells a different story. In March he acknowledged his company was on the U.N.'s list of "approved" crude buyers but insisted in written answers to House International Relations Committee questions that "nothing ever came of it." A committee spokesman remarked at the time: "We believe [Rich] knows more than he wishes to acknowledge." Marc Rich + Co.'s Frutig reiterated an earlier press statement: "Marc Rich Holdings reject all the allegations relating to its involvement in the U.N.'s Oil-for-Food program in Iraq."

Even with the new information, it may be difficult for the authorities to prove that Rich did anything illegal. At the time, Saddam offered oil at cut-rate prices to his supporters, who would then sell it for a huge profit on the market. For two years leading up to September, 2002, the dictator demanded surcharges of up to 50 cents a barrel that he deposited in secret bank accounts, according to the CIA, the Volcker committee, and Senate documents.

While Rich's company bought crude from companies acting on behalf of those with allocations, no documents show he paid illegal surcharges. However, allocation holders would typically "pass on the cost of that surcharge," according to a recent Senate report. "[Buyers] were informed of the required surcharges, and either paid them directly or reimbursed the allocation holder." Hesham denies that INCOME paid illegal surcharges.

Saddam banked about $10 billion from oil surcharges and smuggling, says the U.S. Government Accountability Office. Initially it enabled him to live large, buying fleets of Mercedes and the finest wine, according to the CIA. But when pressure from the Bush Administration mounted in 2001, Saddam earmarked the money for a war chest that "is likely funding the current insurgents," says John Fawcett, an independent investigator tracking Iraqi funds who recently testified to the House Committee on Energy & Commerce.

Some Rich Boys were heavy hitters in Oil-for-Food. In February, 2001, for example, the U.N. Security Council reported that Glencore bought 1 million barrels of Iraqi crude destined for the U.S. The oil was diverted to Croatia, where it was sold for a $3 million premium, that went into a secret bank account. Glencore was caught by U.N. overseers, and later agreed to refund the money to the U.N. A Glencore spokeswoman says the oil was shipped to Croatia for storage and later shipment to the U.S. A CIA report alleges that Glencore paid more than $3.2 million in surcharges to Iraq, something it denies.

The numerous investigations into the U.N. program paint a complex picture of how Rich Boys allegedly work. In September, 2001, U.S. and U.N. authorities were tipped off by a Greek shipping captain, who feared his tanker chartered by Trafigura was involved in sanctions busting. Trafigura, run by former Rich traders Claude Dauphin and Eric de Turckheim, bought Iraqi oil from a Bermuda company called Ibex Energy, according to a U.N. report. Ibex was owned by another former Rich trader, Jean-Paul Cayré. SOCO's Patrick Maugein, once a top Rich trader, was close to former Iraqi Deputy Prime Minister Tariq Aziz. The CIA alleges Maugein received oil allocations that he sold through Trafigura. Maugein denies paying illegal surcharges. Maugein says he knows one of Trafigura's founders. Investigators allege he had a contract with or a stake in Trafigura, something both the company and Maugein deny. Maugein and Trafigura also deny having commercial ties to Ibex.

DEALS WITH EXTREMISTS  
Rich and those like him are so successful because they'll do business with virtually anyone if there are big bucks to be made. Both Rich and Pollner's Taurus Petroleum bought Iraqi crude in 2001 through the now-defunct Zerich, according to MEES shipping records. Zerich was a front for various groups that received oil allocations, a CIA report says.

Some of them, BusinessWeek has learned, are extremists, including Ukranian and Russian outfits that strongly supported Saddam -- as well as North Korean strongman Kim Jong Il. One, Russia's Peace & Unity Party, threw a birthday bash in Moscow in January, 2004, in honor of Kim. At it, Peace & Unity Chairwoman Sazhi Zaindinova Umalatova called Kim "an all-powerful treasured sword...when the imperialists are getting more undisguised in their military ambition," according to North Korea's news agency. Zerich also acted for the Ukraine Communist Party and the Ukraine Socialist Party. In all, Zerich bought $422 million worth of oil from Iraq, according to the Volcker committee.

In the early 1990s after the Soviet Union collapsed, Rich quickly became the most powerful trader there. He was "a coach and sort of a godfather for several of the oligarchs," says Vladimir L. Kvint, a professor at American University's Kogod School of Business. Pollner worked for Chalmers at Bayoil then, and all of them sold Russian crude that they got through the oligarchs.

Rich has long had ties to Mikhail Fridman and his mammoth Alfa Group, says Kvint. In 2001, Rich nearly sold his company to an Alfa division: Zug-based Crown Resources Corp. (now called ERC Trading). During the U.N. program both Rich and Chalmers bought oil from Alfa units, according to MEES: Onako and Tyumen Oil Co., respectively. The CIA report alleges that Alfa paid illegal surcharges to Saddam during Oil-for-Food, which Alfa denies.

Rich is legendary for cultivating people in high places. Traders say he could reach practically any diplomat, oil minister, or dictator in an instant with a phone that some joked seemed surgically attached to his ear. Two of his key Mideast connections were the powerful Bakhtiar brothers, Esfandiar and Bahman. The Bakhtiars -- whose father, investigators believe, headed the Shah of Iran's secret police -- fled to Iraq after the Shah's ouster. Thanks to family ties, Saddam treated them like "adopted sons," says Jules B. Kroll, founder of Kroll Inc., hired by Kuwait to investigate Saddam's finances in 1991.

The Bakhtiar link helped Rich forge links with the Iraqi dictator, says the Kroll report. Kroll says it obtained faxes between Rich and the Bakhtiars describing Rich's intent to trade Iraqi crude through the brothers. Over two decades, Rich traded allegedly through two companies linked with the Bakhtiars: Jaraco and Dynatrade (now owned by INCOME's parent, IGI). The Bakhtiars set up Jaraco in Geneva in 1981. In 2004, the U.S. Treasury identified Jaraco as a major money-laundering conduit for Saddam's billions. Hesham Sheta says, "[One of the] Bakhtiars still acts as a consultant" to IGI, which in turn owns INCOME, from which Rich bought Iraqi crude during Oil-for-Food.

Rich, along with Pollner and Bayoil's Chalmers, were "very trusted by the Iraqi Oil Ministry," says Axel Busch, chief correspondent for industry newsletter Energy Intelligence. A street-smart Staten Island boy, "Pollner is considered a brilliant trader," says Busch. Cultivating relations with small refineries, particularly in the U.S., enabled him to handle big quantities of Iraqi oil by breaking it into smaller cargoes, say industry experts. Pollner, they say, began trading with Iraq before the 1991 Persian Gulf War and continued after a U.N. embargo.

For his part, Chalmers had loaned money to Iraq since the 1980s and received repayment in oil, according to industry experts. The scion of a wealthy Houston oil family, Chalmers, a tight-lipped trader and tennis ace with a taste for fancy cigars, was used to rubbing shoulders with the elite. But he never worked for Rich. Indeed, his lawyer Dalton says they were always "competitors" and "didn't act together in Oil-for-Food." Still, trade reports and CIA documents show they often did deals with the same people in the same places. Chalmers' deep pockets apparently appealed to Iraq's Oil Ministry. After the U.S. lifted its embargo in May, 2003, the ministry said it would sell only to major refiners, but it still allowed two traders to get supplies -- Bayoil and Taurus.

"EERIE" EXISTENCE

These days rich has opulent digs in several countries. He owns a palatial Moorish villa on Spain's ritzy Costa del Sol and a ski chalet in Saint Moritz, Switzerland. His powerful pals have included opera star Placido Domingo and former hedge-fund guru Michael Steinhardt, who, in a letter backing the pardon, called Rich "my friend...who has been punished enough." Former traders say Rich spends most of his time at Villa Rosa, his compound on Switzerland's glistening Lake Lucerne, surrounded by Picassos, van Goghs, and Mirós.

Rich still keeps offices in Zug. "It's eerie," says a financial executive who recently paid a call. "You go up in an elevator and step into a vestibule where you're asked over an intercom if you have an appointment and whom you're there to see. If you're on the list, a security guard opens a door to another room. There you see a receptionist who scrutinizes you. Then you're escorted into another elevator that takes you to a different floor."

Rich has slowed down since his pardon. He sold Marc Rich Investments in 2003 but still runs Marc Rich + Co. Holding, which has a trading operation and a real estate arm. U.S. authorities -- the Justice Dept., in particular -- are on Rich's case. As for some of the Rich Boys, it's possible that the U.N. or even the Swiss government, which is conducting its own investigation into Oil-for-Food, may act if they can prove wrongdoing.

Maybe Rich will once again elude his pursuers. He is fast becoming a mythic persona: Word is a TV series based on his life may be in the works. And the Rich Boys -- his legacy -- rule.

http://www.businessweek.com/magazine/co ... 943080.htm

Phibro LLC

Phibro LLC is an international commodities trading firm and a subsidiary of Occidental Petroleum Corporation (Oxy). Phibro trades in crude oil, oil products, natural gas, precious and base metals, agricultural products, commodity-related equities and other products. Phibro's headquarters are located in Westport, Connecticut, with additional offices in London, Ireland and Singapore.[1]

History

The company was founded in 1901[2][3][4] as Philipp Brothers.[5] It was later acquired and became the Philipp Brothers Division of Engelhard Minerals & Chemicals Corporation. In 1981, the company was spun off as Phibro Corporation, and that same year the company subsequently acquired Salomon Brothers, creating Phibro-Salomon Inc.[6] Phibro Energy, Inc. was established in 1984, absorbing the oil department of Philipp Brothers. In 1986, the combined company removed the Phibro name from the parent company.[7] In 1993, Phibro Energy, Inc. became the Phibro Energy Division of Salomon Inc.[8] It was renamed to simply "Phibro" in 1996, and in 1997, Salomon was acquired by Travelers Group, which merged with Citicorp to form Citigroup in 1998.[7] With the merger, Salomon became an indirect, wholly owned subsidiary of Citigroup.

Phibro came to the notice of the public when its leader, Andrew J. Hall reportedly was seeking a $100 million bonus from Citigroup which had been bailed out by US taxpayers in 2009. Reportedly Phibro was the main source of the $2 billion in pretax revenue Citigroup received in commodities trading.[9]

In October 2009, Occidental Petroleum announced it would acquire Phibro from Citigroup, estimating its net investment at approximately $250 million.[10] Phibro is now part of Oxy's "Midstream, Marketing and Other segment", which includes Oxy's gas plant, pipelines, marketing and trading and power generation operations.[11] Hall continues to run Phibro and also heads Astenbeck Capital Management, of which 80% is owned by Hall and 20% by Occidental.[12]

Royal Dutch was established in The Hague in 1890 after receiving a concession to drill for oil in Sumatra, in the Dutch East Indies. It had the support of King William III, hence the name Royal Dutch. The promoters of this venture had found oil in 1885, but needed funds to exploit their discovery. In the early years the firm was under the energetic direction of J.B. August Kessler under whom, in 1892, it exported its first oil. In 1896 a 30-year-old bookkeeper, Henri Deterding, joined the company and in 1901 he became its chief executive. The predominant use for petroleum in the late 19th century was as paraffin or kerosene, which was used for heating and lighting. However, Sumatra's oil was particularly rich in gasoline, the product used by the internal combustion engine, and it was therefore well placed to take advantage of the growth in demand for oil which the motor car was to bring.

Deterding was one of the great entrepreneurial figures of the 20th century. He combined remarkable strategic vision with acute financial awareness born of his early training as a bookkeeper. His ambition was to build a company to rival the world's largest oil enterprise, John D. Rockefeller's Standard Oil Company of the United States. Deterding preferred to achieve this ambition through alliances and agreements rather than competition. In 1903, as part of this strategy, he formed a marketing company, the Asiatic Petroleum Company, owned jointly by Royal Dutch, Shell, and the Paris branch of the Rothschild family, the latter of which had substantial Russian production interests. A crucial intermediary figure in making this alliance was Fred Lane, who had been one of the original directors of Shell Transport, but who had become closely identified with the Paris Rothschilds and, by the early 1900s, with Deterding.

The "Shell" Transport and Trading Company's origins lay in the activities of a London merchant, Marcus Samuel, who began his career in the 1830s selling boxes made from shells brought from the East. The business gradually expanded the number of commodities in which it traded. When Marcus Samuel Sr. died in 1870, his son Marcus continued to be involved in far eastern trade. In 1878 he established with his brother Samuel, a partnership known as Marcus Samuel & Co. in London, and Samuel Samuel & Co. in Japan, which became a leading shipping and trading enterprise in the Far East. During the 1880s the Samuels, through intermediary Fred Lane, began selling the Russian oil of the Rothschilds to the Far East, breaking the monopoly previously held by Standard Oil. In 1892 the Suez Canal Company was persuaded to allow oil tankers to pass through the canal, which lowered the cost of Russian oil in the Far East, and allowed Samuel to increase rapidly its market share. Later in the 1890s fears that Russian supplies might be reduced led Samuel to search for a secure source of oil nearer his Far Eastern markets, and in 1898 a major oil field was discovered in Dutch Borneo, a year after the launch of "Shell" Transport and Trading Ltd.

http://www.fundinguniverse.com/company- ... story.html


---------

How a Shady Citigroup Subsidiary Secretly Makes Billions in the Oil Market

Crude oil has risen 700 percent in seven years; the lack of oversight has allowed companies like Phibro to pull in huge and questionable profits.  
June 23, 2008  |  
 
If you want to flush out market manipulation, don't turn to the sleuths in Congress. They've been probing trading of the oil markets for two years and completely missed a company at the center of the action. During that period, a barrel of crude oil has risen from $50 to $140, leaving a wide swath of Americans facing a choice this coming winter of buying food or paying their heating bill.

(wait for it....Bam another J-Triber Scam! --CSR)

The company that Congress overlooked should have been an easy suspect. It launched the oil trading career of the infamous fugitive Marc Rich, pardoned by President Bill Clinton in the final hours of his presidency. It was at one time the largest oil and metals trader in the world. In the late '90s it bought up 129 million ounces of silver for legendary investor Warren Buffet's company, Berkshire Hathaway, in London's unregulated over-the-counter market. In 1990, it was one of the first entrants into an ill-fated Russian oil venture called White Nights. In 2005, while part of Citigroup, the largest U.S. banking conglomerate perpetually scolded for obscene executive pay, it handed its chief and top oil trader, Andrew J. Hall, $125 million for one year's work. According to the Wall Street Journal, that was five times the pay package for Chuck Prince, CEO of the entire Citigroup conglomerate that year and $55 million more than the CEO of Exxon-Mobil.

Given this storied history and two years of congressional testimony on oil trading skulduggery, one would expect to find volumes of current information available about this oil trading juggernaut. Instead, this company's activities are so secret that its website, phibro.com, is a one-page affair and lists only the addresses, phone and fax numbers of its offices in the United States, London, Geneva and Singapore. No officers' names, no bios, no history, no press releases. And while the Wall Street firms of Goldman Sachs and Morgan Stanley have been fingered by Congressman Bart Stupak, D-Mich., for gaming the system, Phibro has completely escaped scrutiny during a seven-year period when crude oil has risen an astonishing 697 percent.  

Phibro is the old Philipp Brothers trading firm that has resided secretly and quietly on Nyala Farms Road in Westport, Conn., as a subsidiary of the banking/brokerage behemoth Citigroup since the merger of Traveler's Group and Citicorp (parent of Citibank) in 1998. Traveler's Group owned Phibro at the time of the merger. Despite the fact that Phibro has provided Citigroup with $2 billion in revenue over the past three years, the 205-page annual report for Citigroup in 2007 carries only the following one-sentence footnote on commodity income that acknowledges the existence of this company: "Primarily includes the results of Phibro Inc., which trades crude oil, refined oil products, natural gas, and other commodities."  

Combing through government archives, the first noteworthy appearance of Phibro occurs on April 6, 2001, when the Wall Street law firm of Sullivan & Cromwell sent a letter to the Commodity Futures Trading Commission (CFTC), the federal regulator of oil and other commodity trading, acknowledging that it was representing "the Energy Group." The letter was noteworthy because it delineated just who had teamed up to grease the oil rigging in Washington: namely, two investment banks (Goldman Sachs and Morgan Stanley); a house of cards that would later collapse (Enron); a proprietary trading firm inside a Frankenbank (Phibro inside Citigroup); and two real energy firms (BP Amoco and Koch Industries).

What the Energy Group had long lobbied for and finally received from its federal regulator was the breathtaking ability to trade oil contracts and oil derivatives secretly in the over-the-counter (OTC) market, thus avoiding the scrutiny of regulated commodity exchanges, its CFTC regulator and Congress. The April 6, 2001, letter was essentially to say thanks and interpret the new rules as favorably as possible for the Energy Group.

The change in the law occurred via the Commodity Futures Modernization Act of 2000 (CFMA) and is called the Enron Loophole. (Since Enron's trading room went belly up along with the company, and Phibro is still trading oil secretly all over the world, it should perhaps now be called the Phibro Loophole.)

What the CFTC also granted the big Wall Street trading firms was a license to sneak under the radar by using computer terminals located in the United States while trading oil on foreign exchanges like the Intercontinental Exchange (ICE) located in London but owned by an Atlanta, Ga., outfit that was funded and launched by Wall Street firms and big oil.

On June 3 of this year, Dr. Mark Cooper, director of research for the Consumer Federation of America, correctly outlined the problem to the Senate Committee on Commerce, Science and Transportation:

    The speculative bubble in petroleum markets has cost the economy well over half a trillion dollars in the two years since the Senate [hearings] first called attention to this problem. Public policies have made these markets the playgrounds of the idle rich, while consumers suffer the burden of rising prices for the necessities of daily life. We have made it so easy to play in the financial markets that investment in productive long-term assets are unattractive. The most blatant mistake occurred when Congress allowed the Commodity Futures Trading Commission to forego regulation of over-the-counter trading in energy futures. Because there is no regulation of this huge swatch of activity, regulators have little insight into what is going on in energy commodity markets. Large traders who trade in commodities in the U.S. ought to be required to register and report their entire positions in those commodities here in the U.S. and abroad. If traders are unwilling to report all their positions, they should not be allowed to trade in U.S. markets. If they violate this provision, they should go to jail. Fines are not enough to dissuade abuse in these commodity markets because there is just too much money to be made.

The only correction I would make to the otherwise flawless argument above is that Wall Street is far from the playground of the "idle" rich. Wall Street executives spend every waking minute thinking about (and, I've heard, even dreaming about) how they can separate us from our money, our homes and a voice in Washington. How appropriate that Citigroup's slogan is "the Citi never sleeps."

Let's say the CFTC was not a compromised regulator, was not an audition stage and revolving door for million-dollar jobs in the industry it regulates. Let's say it genuinely wanted to report back to Congress on just how big a player Citigroup is in the oil markets. According to a Feb. 22, 2008, filing with the Securities and Exchange Commission (SEC), Citigroup has more than 2,000 principal subsidiaries (meaning it really has more but it's not naming them). Of these, a significant number are secret offshore entities where records are unavailable to regulators. (Consider this mind-boggling look at this sprawling octopus.)

So the CFTC can't get its hands on all records, and even in jurisdictions where it can, it first has to know under what names, out of a possible 2,000, Citigroup is trading oil and then aggregate the positions.

On May 6 of this year, Tyson Slocum, director of the energy program at the nonprofit watchdog Public Citizen, testified before Congress on yet another roadblock preventing a meaningful investigation of oil price manipulation:

    Thanks to the Commodity Futures Modernization Act, participants in these newly deregulated energy trading markets are not required to file so-called Large Trader Reports. These Large Trader Reports, together with the price and volume data, are the primary tools of the CFTC's regulatory regime. So the deregulation of OTC markets, by allowing traders to escape such basic information reporting, leave federal regulators with no tools to routinely determine whether market manipulation is occurring in energy trading markets. The ability of federal regulators to investigate market manipulation allegations even on the lightly regulated exchanges like NYMEX [New York Mercantile Exchange] is difficult, let alone the unregulated OTC market.

Next comes what can only be described as an act of insanity on the part of the Federal Reserve. After allowing for the repeal in 1999 of the Depression-era investor protection legislation known as the Glass-Steagall Act in order to let Citigroup house retail bank deposits, investment banking, insurance, stock brokerage and speculative proprietary trading under one roof (the perfect storm that intensified the Great Depression), the Federal Reserve decided on Oct. 2, 2003, that Citi wasn't scary enough. It needed to allow this company that had already been named in hundreds of lawsuits for securities frauds and manipulations and could not remotely manage itself as a financial firm to ramp up its oil trading business by allowing it to take possession of crude oil on tankers because it would "reasonably be expected to produce benefits to the public." Here are excerpts from the Fed's release suggesting the expansive plans Citi had in the oil storage and transport business:

    Citigroup has indicated that it will adopt additional standards for Commodity Trading Activities that involve environmentally sensitive products, such as oil or natural gas. For example, Citigroup will require that the owner of every vessel that carries oil on behalf of Citigroup be a member of a protection and indemnity club and carry the maximum insurance for oil pollution available from the club. Citigroup also will require every such vessel to carry substantial amounts of additional oil pollution insurance from creditworthy insurance companies. Furthermore, Citigroup will place age limitations on vessels and will require vessels to be approved by a major international oil company and have appropriate oil spill response plans and equipment. Moreover, Citigroup will have a comprehensive backup plan in the event any vessel owner fails to respond adequately to an oil spill and will hire inspectors to monitor the loading and discharging of vessels. Citigroup also has represented that it will have in place specific policies and procedures for the storage of oil. The Board believes that Citigroup has the managerial expertise and internal control framework to manage the risks of taking and making delivery of physical commodities. For these reasons, and based on Citigroup's policies and procedures for monitoring and controlling the risks of Commodity Trading Activities, the Board concludes that consummation of the proposal does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally and can reasonably be expected to produce benefits to the public that outweigh any potential adverse effects.

Voting in favor of this unprecedented action was then Federal Reserve Chairman Alan Greenspan as well as the current chairman, Ben Bernanke.

Could the Fed have been more wrong about Citigroup having "the expertise and internal controls to integrate effectively the risk management?" Two years later, in March 2005, the bipolar Fed had this to say about Citigroup: "Given the size, scope and complexity of Citigroup's global operations, successfully addressing the deficiencies in compliance risk management that have given rise to a series of adverse compliance events in recent years will require significant attention."

Today, the situation is as follows: Citigroup has taken $42 billion in credit losses and write-downs in the past year and has just announced that more write-downs are coming, and the Fed has an intravenous money feeding tube hooked up between its vault and this banking/brokerage/subprime mortgage lending/oil trading mad scientist experiment.

In addition to the secretive Phibro oil trading unit, Citi has formed Citigroup Energy and moved it to Houston. In a "help wanted" ad placed in Canada, it described itself as follows: "Citigroup Energy is a global energy trading, marketing and risk management company based in Houston with offices in Calgary, New York, London, and Singapore. Our goal is to become the premier global energy commodities marketing and trading organization. Currently our capabilities include trading and marketing derivatives/structured products in power, natural gas, crude and crude products."

Enron also called itself the "premier" energy trading organization. Apparently impressed with that model, Citigroup Energy has hired a significant number of former Enron traders.
Pam Martens worked on Wall Street for 21 years. She has no securities position, long or short, in any company mentioned in this article. She writes on public interest issues from New Hampshire.

http://www.alternet.org/economy/88995/h ... age=entire

[CrackSmokeRepublican]

J-Tribers  and their Shabbos Goyim.... running up global Gas Prices:

----------

 


UPDATE 1-Hall's Astenbeck fund beats rivals even as oil lags
Thu Feb 10, 2011 4:02pm GMT
 
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[-] Text

 * Astenbeck returned 12 pct last year vs 29 pct in 2009

 * Hall's Phibro appears to be up too

 (Changes date, adds Thursday's oil prices)

 By Barani Krishnan

 NEW YORK, Feb 10 (Reuters) - Andrew Hall's ability to beat
competitors with a 12 percent return on his flagship hedge fund
and raise over $1.5 billion last year is probably unsurprising
from a trader accustomed to outsmarting rivals.

 The surprise is that he did it by betting on things other
than oil.

 The $1.7 billion Astenbeck Capital Management, run by Hall
and part owned by Occidental Petroleum Corp (OXY.N: Quote), returned
just over 12 percent last year, down from nearly 29 percent in
2009, performance numbers from the Westport, Connecticut-based
firm show.

 Hall is one of the most closely-watched traders in the
energy space. He shot to prominence with Phibro, an
energy-focused firm previously owned by Citigroup (C.N: Quote).

 Phibro was sold to Occidental in 2009 and Hall has
continued running the firm, along with Astenbeck. Occidental is
also an investor in Astenbeck.

 While Hall's world has revolved around the oil market for
years -- he earned $100 million payouts for two straight years
for his work at Phibro -- his latest note to investors showed
he had begun paying more attention to grains and metals as
those markets rallied more than oil in 2010.

  "The persistent contango in the oil markets throughout
most of 2010 meant that returns from oil were not as good as
those from some other commodities," he wrote in the Jan. 3
note, a copy of which was obtained by Reuters.

 The "contango" structure punishes those who hold long-term
long positions, forcing them each month to sell the cheaper
prompt contract and buy the more expensive second-month in
order to roll forward their position.

 Hall didn't say which markets paid off best for Astenbeck
in 2010, but noted that metals and agricultural commodities
performed strongly, while natural gas had hit a bottom.

 He said prospects for oil in 2011 looked good as OPEC would
likely be forced to raise production by 1 million barrels per
day (bpd), drawing down available spare capacity to just 2
million bpd -- a level which is "associated with sharp price
spikes" that would likely force consumers to ration demand.

 This year oil rose to levels last seen when prices were
tumbling in late 2008 during the financial crisis. Benchmark
U.S. crude CLc1 hovered near $87 per barrel on Thursday after
spiking above $92 in January. London's Brent oil LCOc1 traded
at just above $101 a barrel, after breaching $103 a week
earlier.

 Monthly returns at Astenbeck shot above 9 percent in both
September and December -- both months when oil outperformed
last year. (Graphic of monthly Astenbeck performance:
r.reuters.com/xuv87r)

 BEAT THE AVERAGE

 Astenbeck's returns equalled that of BlueGold Capital
Management, a $2 billion energy hedge fund in London renowned
for making big bets on oil prices. BlueGold, run by former
Vitol oil trader Pierre Andurand, posted 12 percent gain in
2010 after struggling through most of the year on subdued
volatility in the energy complex and rangebound prices.

 Chicago-based Hedge Fund Research said the average energy
hedge returned nearly 5.5 percent last year, up from 2.6
percent in 2009, putting both Astenbeck and BlueGold in the
higher rank of performers.

 But with the financial crisis far from over, the huge sum
Hall had raised for Astenbeck within a relatively short span --
more than $1.5 billion in a year -- suggests that investors in
his hedge fund may have been expecting more.

 "Given the market conditions, I guess Andy's done all
right. But there are people out there who may differ with me,
given his reputation," said an investor in Astenbeck, who
manages a fund of funds.

 Astenbeck did not return a call seeking comment.

 Astenbeck, named after a town in Germany located near a
castle owned by Hall, was initially set up as Phibro
Commodities Fund II. As of February last year, it was reported
to have just under $150 million under management.

 Industry observers said Hall's fund-raising for Astenbeck
was one of the largest across the hedge fund universe in 2010.

 "It's really tough to raise money in an environment like
this but he seems to have done it," said Emma Sugarman, head of
the U.S. capital introductions group at BNP Paribas SA in New
York, which helps hedge funds meet investors.

 "For other guys, even if they're spinning out of well-known
shops, it's much harder. We've seen people coming out saying
they are expecting to raise $500 million and actually launching
with $100 million."

 OXY PROFITS SURGE TOO

 Hall left Citi after his proposed $100 million bonus for
his work at Phibro became a lightning rod for criticism over
excessive Wall Street payouts.

 Occidental bought Phibro in October 2009, and Citi and Hall
agreed to defer his compensation until it could be paid by
Occidental. Occidental also bought from Hall a 20 percent stake
in Astenbeck, which he set up in 2008 while still at Citi.

 Phibro was formed in 1901 as Philipp Brothers, initially
trading in a wide range of commodities that included metals and
grains before it begin focusing on energy in the 1970s. Citi,
which gained control of Phibro through its acquisition of
Travelers Cos. in 1998, opened the firm to outside investors in
2007 through partnerships in two oil funds.

 Phibro's results are amalgamated into Occidental's and are
not reported separately. Occidental reported a 55 percent in
net income to $4.5 billion last year and company spokesman
Richard Kline said Phibro was included in its "midstream"
earnings -- which rose more than 100 percent to $472 million.

 (Editing by Lisa Shumaker and Jonathan Leff)


http://af.reuters.com/article/energyOil ... 3020110210

[mchawe]

After Buffet had entered the silver market, it looks like he was "warned" to keep out. That is why he got out with a relatively small profit.  JPM was massively short (alone accounting for about 75% of the short positions on COMEX) and Buffet probably just went in to make a buck, without taking into account this big imbalance. After that he found himself with a seat on the Fed.